Jacobs Solutions (NYSE: J) closed its fiscal third quarter with a record $28.9 billion backlog, gross revenue up 34.5% year over year to $4.1 billion, and a third consecutive full-year guidance raise. Those numbers read as confirmation that the company is capturing share across infrastructure and technology. What complicates that read is where the growth is actually landing.
The backlog grew 27.3% from a year earlier, and the trailing twelve-month book-to-bill ratio landed at 1.4x, meaning Jacobs is winning more work than it ships. CEO Bob Pragada attributed the strength to broad demand across data centers, semiconductors, energy and power, transportation, and water within the Infrastructure & Advanced Facilities segment, where gross revenue climbed 39% year over year and adjusted net revenue grew 10% organically. Engineering News-Record ranked the company number one in 18 categories, including data centers, a jump of six spots from a year ago.
The balance sheet holds up. Jacobs generated $456 million in cash from operations during the quarter, funding $142 million of share buybacks in Q3 and $614 million year to date. CFO Venk Nathamuni noted net leverage fell below the company's year-end target despite that pace of repurchase.
Gross revenue grew at roughly four times the rate of adjusted net revenue, which expanded only 8.3%, a gap that points to meaningful pass-through work in the mix. The quarterly adjusted net revenue book-to-bill came in at 1.1x, below its own 1.2x trailing average. Total backlog climbs; core business bookings may be cooling.
The counterargument to a bearish GAAP reading is that the tax drag is transitory. Net earnings from continuing operations dropped to $137.4 million from $181.2 million a year earlier, and GAAP earnings per share fell to $1.16 from $1.56. The GAAP effective tax rate jumped to 43.4% from 21.9%, a swing of 2,150 basis points tied to the PA Consulting acquisition. Management's adjusted effective tax rate moved only 160 basis points, to 26.4%, and the company describes the GAAP impact as temporary. That framing carries real weight if it holds.
On balance, 40 hedge funds held the stock at last count, up from 37 a quarter earlier, and short interest stands at just 3.87% of the float. The stock traded at a forward price-to-earnings ratio of 17.70 as of September 4, a multiple that bets on the tax headwind fading and the quarterly book-to-bill mean-reverting toward the trailing 1.4x rate.